Billed as a “reverse Postmates,” TipTop has launched its first app, TipTop Cash, with the promise to help shoppers resell products like used iPhones.
Bastian Lehmann spent 10 years building on-demand delivery service Postmates into a popular way to buy more products, fast. Now, he’s back with a new startup called TipTop looking to do the reverse: make it easier, and more lucrative, to sell them.
“Postmates brought the whole city to you in a really effortless way,” Lehmann told Forbes. “Here, we’re taking all the effort out of selling and making these things disappear.”
The problem, according to Lehmann, is simple: buying is now easier than selling. And while services like eBay and Facebook Marketplace offer ways to list, stage and price those items for repurchase, the hassle and uncertainty around getting a fair value means that many of us don’t bother. “If you go to different websites, do all the legwork yourself, that’s great,” Lehmann said. “But if you don’t, and you still have an old iPhone in a drawer somewhere, or the baby stroller that you promised you would sell to a friend but it never happened, at some point, all of these things become junk.”
With TipTop, Lehmann is taking a big bet on a new approach that uses software to predict the value of a product to offer a consumer instant cash, sight unseen. Its first app, released across the U.S. today and called TipTop Cash, connects to your Gmail or Amazon accounts to scan for past purchases and predict a fair value to offer for each eligible item — then pay it out and send someone to pick it up. A second service launching in November, TipTop Pay, will move that process up-front, offering you a discount on how much you pay for something in exchange for the promise that you’ll return the product after a fixed period of time. TipTop will then resell that inventory to wholesalers or on other third-party marketplaces like eBay.
“A lot of people told me they would never use food delivery at some point in their life.”
It’s no coincidence that Lehmann launched TipTop Cash the week after Apple announced its new flagship smartphone, the iPhone 15. He’s hoping to offer a similar system to Apple’s iPhone upgrade program. On TipTop Cash, you can simply purchase an iPhone for its list price minus, say, the $400 that TipTop predicts it can resell for in two years. Then, when those two years are up, turn it in and do it again. If the app’s mechanics work, he said, it should make it easier for people to upgrade to the new phone, and whatever comes after it. The trick is to create a liquid market where owners know how much money they’re getting, buyers understand the price they’re paying, and Lehmann gets a cut.
If the model seems too good to be true — with countless online resellers, tech giants and marketplaces not offering anything quite like it — that’s because Lehmann’s new venture arrives with plenty of risk. TipTop’s models are doing a lot of work, from predicting whether a customer can be trusted to turn in an unseen product to guessing the market price and demand for that item months or years down the road. In reselling its inventory, TipTop needs to find a margin that makes it money, too, without gouging so much as to make its customers feel exploited.
Lehmann’s under no illusions to the contrary. But his experiences with Postmates also make him sound at peace, even wry, about making the attempt. “A lot of people told me they would never use food delivery at some point in their life,” he added. “Then it became totally acceptable to push a button and have something delivered.”
After the ‘delivery wars’
In January 2021, the month after Uber completed an all-stock acquisition of Postmates at a price tag of $2.65 billion, Lehmann was shown the door alongside many of his former executives and colleagues. Founded in 2011 in San Francisco before moving to other markets like New York with great buzz, Postmates reached 10 million customers and quarterly revenue of more than $100 million in 2020. It had taken on $900 million-plus from venture capitalists at a valuation of $2.4 billion, and even filed to go public.
But fellow startup DoorDash had at least partly eaten its delivery lunch, passing it in market share by the time it went public in March 2021 (the company reached a first-day market cap of $59 billion but now trades just over half of that). Postmates teamed up with Uber’s UberEats unit in an alliance to survive. “We didn’t win the food delivery wars, but we were a fantastic brand, and a company that was almost profitable at the time,” Lehmann said now.
After some months spent focused on his two young daughters, Lehmann in late 2021 met with Postmates’ former backers to chat about his next move as a venture capitalist. But he was haunted by decisions he’d made at Postmates that could’ve changed its trajectory, like getting caught up in the hyper-competitive food delivery race instead of sticking to a broader “master plan.” He also realized he was happiest building startups, not advising them. “Investing in companies bores me more than anything else,” Lehmann told Forbes.
So when Netscape cofounder and past Midas List investor Marc Andreessen asked him about ideas he was considering, it wasn’t a hard sell to jump back into startups again. Andreessen’s firm, a16z, led a $23 million Series A funding round in TipTop as reported by TechCrunch last March, with Silicon Valley luminaries like Sam Altman and Naval Ravikant joining. TipTop skipped a seed round, Lehmann clarified, though he initially put up $500,000 of his own. (As one of 13 total employees, Lehmann said he also takes no salary.)
“We were too dumb to invest in Bastian’s previous company, Postmates, so we’re excited to finally fix our mistake!” Andreessen wrote Forbes in an emailed statement.
Collecting receipts
Lehmann has kept tight-lipped about TipTop’s product until now. It was previously rumored to be a crypto consumer project. Lehmann conceded a crypto angle was considered, related to collating a person’s purchases from different sources into one ledger.. But TipTop didn’t go ahead with that plan, Lehmann said, and has no crypto component now. Instead, the app that TipTop has actually built appears to draw inspiration from Affirm and the buy-now, pay-later companies, fashion resellers like The RealReal and Thredup, and Postmates itself.
About 1,000 beta testers have tried TipTop Cash in recent months, with the startup underwriting $1 million in purchase offers. While consumer electronics are the company’s initial focus, it tested other categories and will allow customers to request cash offers on any item for which they have a receipt moving forward, Lehmann said. TipTop Pay is currently in beta with merchants, the CEO added, but declined to provide further details.
In a crowded category, Lehmann pointed to TipTop’s convenience and transparency as ways that it could stand out. Approved transactions on TipTop Cash are deposited near-instantly onto debit cards, or within three days into bank accounts; no shipping is required, as a DoorDash courier picks up the product same-day. (“It’s funny that Tony [Xu, DoorDash’s CEO] and I get to work together again,” Lehmann said.) Prices, meanwhile, are generated in real-time and presented alongside past and projected ones so customers can make what Lehmann argued is a fairer choice than they would face if given a lowball offer after going through the trouble to ship the item first. “That’s designed to be a rigged game for the customer,” he said.
TipTop’s models are only able to make such offers because when you sign up, you have to give it access to your Gmail or Amazon account so it can look through your purchase history, however, raising potential privacy and security concerns. Lehmann said customers uncomfortable with that arrangement could manually upload receipts for one-time offers, though they might not receive as favorable a price, or as fast. He declined to comment on what metadata TipTop is collecting within Gmail to verify a person’s digital “fingerprint,” or whether it looks beyond emails flagged as receipts. “It enables the greatest convenience, but it can also be off-putting for some,” Lehmann said more broadly.
The entrepreneur freely admitted that the blue-chip retailer who makes what will likely be one of TipTop’s flagship products — Apple — may never need to partner with TipTop due to its own financing and trade-in plans. Plenty of inventory will still come from third parties like Best Buy even then, he argued. “Maybe to win Apple, we have to work really hard. Maybe we don’t win Apple as a merchant. We can give everyone else an Apple-like experience,” Lehmann said.
There are a lot of such unanswered questions for Lehmann, this early into TipTop. He may launch TipTop Teams, a third app, for startups looking to buy MacBooks and hardware in bulk. Higher-end inventory could get packaged in fancy boxes, or come with a handwritten note. Just what items will be eligible for resale is already a point of friendly contention: Gokul Rajaram, a DoorDash executive and angel investor in TipTop, said he’s asked Lehmann to help resell his unused Peloton, only to be rebuffed over its weight and shipping costs. Rajaram told Forbes that Lehmann is “relentlessly resourceful,” perhaps in the hope of still unloading his bike.
The looming holiday season is likely coming too soon for TipTop to learn much about how customers are responding to its apps, Lehmann said; he’s hoping that in one year’s time, he’ll have the data to know more. “I’m not arrogant enough to say I can predict the future, but I think this is interesting,” Lehmann said. “I’m not saying if this will work. We’re saying we want to figure out if we can make it work, and that’s a big difference.”
Read the full article here